Investment Flows Into Social Impact Solutions Point To Operationalization Of Corporate Social Agendas
Investment Flows Into Social Impact Solutions Point To Operationalization Of Corporate Social Agendas
Corporate Social Responsibility (CSR) platforms have been around since the 1980s but the renewed appetite in social impact has been fueled by wholesale changes in attitudes following global activist events and the COVID-19 pandemic. Amidst a war for talent, corporates vying to attract new employees must live their ESG values and engage stakeholders internally and externally, demonstrating social values in the process. Social impact is about more than a good photo opportunity.
Central to the fresh focus is the investment landscape. It has had a twofold impact on social impact solutions:
1) Significant funding has gone into social impact solutions over the last 12 months. The appetite for investment in social impact software is indicative of the growing awareness for its need. Culture Amp, a new-wave HCM-style platform, raised $100 million in July 2021 led by Sequoia Capital China. Lattice, a ‘people success platform’ raised $128 million in January 2022, and Submittable, a corporate philanthropy-focused solution, raised $47 million in Series C funding in June 2022. Alaya, another corporate giving and volunteering platform, was acquired by Benevity in December 2021, adding extra weight to their existing offering.
2) Social impact solutions can help organizations’ own investment potential. Driving the investments in software solutions is the underlying value that they can provide to corporates. Achieving enhanced social credentials and ESG scores as a result of using software solutions can improve an organization’s attractiveness for investments from pension funds and asset managers. The UK government’s decision to initiate a taskforce to integrate social factors into pension scheme investments, to address financially material social factors, exemplifies a scenario where higher social performance will result in better investment opportunities in the future.
Firms that are seeking to develop social impact strategies, or build on existing systems, should look for software that maps to four core capabilities: diversity, equity and inclusion (DEI), stakeholder engagement, corporate donating and giving, and employee engagement, as a foundation. Currently data on how organizations engage with social impact, and even the extent of their social impact, are disparate, held with an array of internal teams and functions within firms, if at all. With more regulatory requirements expected, focusing on working conditions, human rights and the social double materiality of organizations, social impact solutions can be utilized to operationalize social benefit agendas, enhance data collection and develop competitive advantages for investment and to win market share. For more information and a benchmark of different solutions, see: Smart Innovators: Social Impact Solutions.